Expert Talk: Tax specialist Ritul Patwa shares useful tips for MSMEs

To take their business to the next level, SMEs can benefit from expert advice and guidance on business development, taxation, compliance and growth opportunities. GlobalLinker co-founder Sameer Vakil met Ritul Patwa, a GlobalLinker member and tax expert in Jaipur. In a candid conversation, Ritul shares his business journey and expert tips for SMEs.

Watch this video for some wonderful insights and tips.

Highlights from the interview.

Business journey of a first-generation entrepreneur

Ritul shares that his family has a jewellery business, but he was drawn to finance from a young age, much to the dismay of his father. After getting a degree in chartered accountancy, Ritul started his practice in 2002. In his first case, he helped the Rajasthan Garment Association in lobbying to bring about an amendment in a budget proposal. Ritul shares, “I have been working on tax laws and now we basically specialise in tax policy formation and we help a lot of trade bodies, corporations in making better laws and improvising laws.”

This keeps Ritul sharp and focused on the macro-economic picture and as well as gauge the pulse of individual businesses. He shares, “We work with lot of companies like e-commerce businesses. We have even helped them in certain resolutions of key issues. I’ve also worked with telecom companies. Currently, I am working with Government of Rajasthan on certain cases. Recently we have worked with income tax department and we’ve built a software for them for investigative intelligence. We are the first CA firm which has made a software for the income tax department and we have launched it in a short span of three months.”

Startups must have a sound profit model

Ritul emphatically believes that all startups must have a sound profit model. He shares, “A startup is all about an idea. What is important is that you should first think of an idea and then think of investing money in it. Any business which does not have a proper profit model is not a business for me. A business may have a gestation period which is say 3 years or 5 years or even 10 years in businesses like e-commerce. But you should still have a profit model. If you intend to start a business, you should first think of how you will make profit out of it.”

Small businesses must be compliant. Taxation is one thing which can bring your business down. There are small issues you may avoid initially or just brush aside. But some years down the line, these issues get magnified.

Tax compliancy is very important

Ritul opines, “Small businesses must be compliant. Taxation is one thing which can bring your business down. What happens is there are small issues you may avoid initially or try to take them lightly and just brush them aside. But five years down the line, these issues are going to haunt you and you will find that they get magnified.”

He agrees that this is the time for businesses to scale, grow and reinvent themselves, and being compliant is a requisite for uninterrupted growth. Moreover, he believes that investors are looking to invest in safe, systematic businesses and GlobalLinker can be a great enabler in this matchmaking.

Practical tips for SMEs to be more compliant

Ritul has some wonderful practical advice for business owners to be more compliant. He shares, “The first day a client comes to my office I tell them to prepare a compliance chart. It’s a single page chart wherein we jot down months on the top, then compliances beneath that— income tax compliances, TDS compliances, GST compliances, all the laws ESI, PF everything even add banking liabilities. Everything is captured on this sheet and then there is due date and actual date of payment.” He adds, “This way you can better manage your compliances. I always believe in articulating your dues, liabilities and compliances and then moving ahead accordingly.”

E-commerce and export sector offer maximum scope for growth

“Everybody knows that e-commerce is the future," states Ritul. He adds, “I am strongly of the opinion that the export market has not yet been tapped to its full potential. We need to be more cost-effective; we need to take our products out of India and explore the world market. If we are to be a five trillion economy, it is not possible without boosting our exports.”

Opportunities in healthcare and education

Ritul believes, “In healthcare, the opportunities are in the top segment. For those below the poverty line, government is committing to making healthcare free. If you offer the best products or quality, you can get mileage. This is the concept of healthcare hospitality.”

Regarding the education sector, he opines, “Edtech, which is all about how technology can link to education offers good opportunities.”

How to choose the ideal chartered accountant for your business?

“If you are choosing a chartered accountant then choose a person who tells you what is right, don’t choose a person who tells you what suits you. If you have a person who tells you what is right, then in the longer run that advice sustains," advises Ritul.